Theresa May’s speech in Belfast today has put the thorny issue of the Irish “backstop” back at the heart of the Brexit negotiations. Despite all the focus on ministerial resignations and parliamentary turmoil this week, it is the backstop – more than any other issue – that threatens a complete breakdown in the Brexit talks.

The backstop – agreed in principle by the UK and the European Union in December – is designed to prevent a hard border between Northern Ireland and the Republic of Ireland. Without the backstop agreed, no withdrawal agreement can be signed, and therefore no transition period can be implemented.

Barnier welcomes Raab to Brussels – with the mother of all deadlines

Read more

The UK would crash out of the EU, creating chaos at the borders, increasing the cost of living for households, and throwing EU citizens in the UK and British citizens in the EU into limbo. Moreover, while most aspects of the future relationship can be resolved during the transition period after Brexit, the EU’s chief negotiator, Michel Barnier, has made clear that the Irish backstop must be agreed now. The stakes therefore couldn’t be higher.

And yet when it comes to the backstop, currently the UK and the EU are at complete odds. The EU wants the UK to sign off on a Northern Ireland–only backstop. This would keep Northern Ireland in the EU’s customs territory, its VAT area, and its single market for goods, in the event that no alternative trade or technical arrangement could be agreed to avoid a hard border.

The UK, on the other hand, is implacably opposed to a Northern Ireland-only backstop, which would create a customs border in the Irish Sea. As a committed unionist, Theresa May has stated again today in unequivocal terms that no prime minister could agree to such an arrangement, however hypothetical. Just this week, parliament easily passed an amendment preventing the possibility. The Democratic Unionist party is particularly opposed – and of course its MPs are critical for the government’s survival.

The UK government has, in turn, proposed a different backstop, in effect extending the UK’s membership of the EU’s customs union for a limited period until alternative arrangements have been agreed. On top of a customs union, the recent Chequers agreement proposes a “common rulebook” on trade in goods for the proposed future partnership. Taken together, the UK thinks these two proposals should be enough to avoid a hard border in Ireland.

But the EU will see this as a British wheeze to extend the backstop to the whole of the UK, rather than just Northern Ireland, and therefore get preferential access to the EU market via the back door.

Play Video

0:44

Theresa May promises 'smooth and orderly' Brexit – video

For the EU, the UK’s proposal threatens its very integrity. If the UK stayed in the single market for goods without signing up to the free movement of people or services, this would undermine the indivisibility of the four freedoms (goods, services capital and labour) – a core tenet of the EU’s single market.

May’s first option is compromise. The UK could try to persuade the EU to agree a whole-UK backstop by extending the EU’s common rulebook to other areas of the single market – similar to the “shared market” model advocated by the Institute for Public Policy Research. This would be a sensible approach to the future partnership. But Barnier is unlikely to be sympathetic to applying it to the backstop. This is because the EU sees the backstop as an insurance policy, to be used if all else goes wrong. Brussels doesn’t want the matter of the Irish border to predetermine the entirety of the UK’s future relationship with the EU.

So what can the prime minister do? The second option is to find a fudge – indeed, her biggest fudge yet. The government could agree the Irish backstop with the EU, but simultaneously include alongside the withdrawal agreement a unilateral declaration that the UK will ensure that it never needs to be used. This could help her save face – by committing in text to not using the backstop – while nevertheless giving the EU the assurances it needs to proceed with an orderly withdrawal.

Another fudge doing the rounds is the idea of a “backstop within a backstop”. This would keep the UK’s option of a temporary customs union on the table but include the EU’s Northern Ireland-only proposal as a further fallback option if the UK’s ideas couldn’t be made to work in practice.

But a fudge like this would put further pressure on May’s Chequers agreement – because under these circumstances she would be committed to doing whatever it takes in the next stage of the negotiations to avoid the use of the Irish backstop.

This leaves the last option: dig in and hope for the best. This might be tempting for May – she may want to reprise her role as a “bloody difficult woman” in the Brexit talks. But there’s no sign yet that the EU is willing to budge on the backstop either. As the March deadline approaches, the risk is that by sticking to their guns the UK and the EU divorce each other next year with no deal in place at all.

• Marley Morris is senior research fellow and Brexit lead at the Institute for Public Policy Research